Inflammatory macrophage-derived cytokines such as tumor necrosis factor (TNF) and interleukin-1 play a key role in host defense and have been implicated in the pathogenesis of inflammatory diseases. Their production needs to be tightly controlled in order to avoid toxicity, tissue damage, and chronic inflammation/autoimmunity. Inflammatory cytokine production is regulated by homeostatic factors that include IL-10, TGFbeta, glucocorticoids, and members of the IL-6/gp130 family of cytokines. In macrophages, IL-10 is a key cytokine that suppresses the production of TNFalpha and IL-1. The anti-inflammatory properties of IL-10 (and of IL-6 family cytokines) are mediated by the signal transducer and activator of transcription 3 (Stat3), which is a key suppressor of TNF production. The level of inflammatory cytokines produced by macrophages is determined by the balance between macrophage-activating stimuli and homeostatic cytokines that suppress cytokine production. The hypothesis underlying this project is that inactivation of homeostatic mechanisms, specifically Stat3, by a subset of macrophage-activating factors results in increased TNF production that then can contribute to strong innate immune responses, but also to excessive inflammation and thus pathogenesis of inflammatory diseases such as rheumatoid arthritis (RA). To support this hypothesis, we have found that numerous inflammatory factors, including IL- 1, TNF, LPS, GM-CSF, and reactive oxygen intermediates, suppress activation of Stat3 by IL-6, a pleiotropic cytokine that has weak suppressive effects on macrophages (and activates other immune cells). In contrast to IL-6, activation of Stat3 by IL-10, a strong inhibitor of TNF production, was relatively resistant to inhibition. IL-10-induced activation of Stat3 was effectively inhibited only by microbial particles that activate Toll-like receptor 2 (TLR2), such as zymosan (yeast cell walls) and heat-killed Staphylococcus aureus. Stat3 activation and function were also suppressed by IFNgamma, which acted, at least in part, indirectly by inhibiting TLR2-induced production of endogenous IL-10. Stat3 activation by IL-6 and IL-10 was blocked in vivo, including in RA joint macrophages. In this application, we will investigate mechanisms by which Stat3 activation is suppressed, thereby leading to increased TNF production. We anticipate that these studies will yield insight into the regulation of inflammatory cytokine production during innate immune responses and in inflammatory diseases.